Ed Miliband, the climate change secretary, is close to reaching an agreement on toughening his legally binding climate change targets by promising to take into account emissions from shipping and aviation. He is also expected to include a commitment that by 2012 businesses will be required to report annually on their carbon emissions. Business is responsible for 30% of total emissions.

Miliband was praised by environmentalists last week when he increased the UK legal target to cut the greenhouse gas emissions target from 60% to 80% by 2050. Miliband said he was responding to evidence that the science showed the risk of climate change was growing, and said Britain would make an 80% cut to the headline target in its climate change legislation.

But he faced widespread criticism over plans to exclude aviation and shipping from his legally binding targets — blowing a massive hole in the 80% target, according to green campaigners, who argued that the omission of aviation would mean there was no serious business incentive to bring on a new generation of efficient aviation engines.

Sixty five Labour MPs, with the support of Frinds of the Earth and led by the former business minister Nigel Griffiths, immediately tabled an amendment to the climate change bill, due to be debated next Tuesday, demanding that ministers take aviation into account when setting the UK's carbon budgets.

Such a show of Labour backbench strength would be enough to ensure an embarrassing defeat for Miliband in the opening weeks of his department. Aviation and shipping are estimated to account for 7.6% of all UK emissions. Griffiths said yesterday: "We have had very positive meetings with Ed Miliband and Joan Ruddock. They … recognise the need to add emissions, including aviation and maritime. Our discussions have been about how this could be done. We are all agreed that this is desirable."

Officials have told green groups that they are working on an agreement to require ministers to take into account aviation and maritime emission, using existing international carbon reporting methodology. A duty may also be placed on ministers to report the emission of greenhouse gases from aviation or shipping.

Ministers have not yet reached agreement on these proposals with all government departments, with some reluctance from the transport department.

The climate change bill, an international first, is designed to set out an economically credible pathway for cuts in UK emissions by 2050 by putting into statute medium- and long-term targets.

Miliband has been reluctant to include aviation and shipping in the bill partly because his chief climate change adviser, Lord Turner, said there was no international agreement yet on how to measure aviation and shipping, or specifically on how to allocate emissions between states. It is not easy to reach international agreement, for instance, on how to allocate the emissions of a Spaniard flying on a Swiss aircraft from Madrid to London.

Ministers have said that it might take until 2009 to reach an international agreement on whether, or how, to include aviation.

A government official said: "We are hopeful we can reach agreement with our backbenchers, but we are anxious about including something in the bill that cannot yet be measured accurately. This is such an ambitious and ground-breaking bill that we cannot get it wrong."

Ministers have also given a separate undertaking in the Lords that they will amend the energy bill to support smaller producers of electricity generation. The scheme will give incentives to individual householders, as well as schools, hospitals and community projects. The bill will include an upper limit for feed-in tariffs, possibly set at just over 2 megawatts. An amendment will also be included to encourage small-scale combined heat and power projects.